30^th November, 1999

1. We have recently completed a review of the needs of agricultural and rural development policy for an enlarged EU. This work has been prompted by the acceleration in pre-accession concerns on the political agenda. A matter of current concern is the inordinately slow growth of the agricultural and rural regions in EU pre-accession countries in central and eastern Europe.

2. As a result of this work we have become aware of a series of deficiencies in current national policies in pre-accession countries which eroding all prospects of a successful pre-accession phase for several countries.

3. Unfortunately, the last European Commission was particularly lax about focusing its attention of the fundamental economic questions facing pre-accession country agriculture and rural development. The general lack of participatory development by both national ministries and the European Commission has resulted in a highly defective provision by the European Union in the area of agriculture and rural development.

4. We have already communicated to you, in a separate document, the major oversight and lack of attention being paid to the land question as a basis for long term finance to stimulate investment and economic growth.

5. This communication turns to another major oversight which has major macro-economic performance and rural development implications and affected specific segments of rural communities.

6. We refer, in particular, to the treatment of the largest minority community in central Europe, the Romani; some 80% of which live in rural regions.

7. We have been informed of a wide range of personal and institutional discrimination leveled against this community but in this communication we will raise just one issue which needs the full attention of the pre-accession governments and, in particular, the European Commission.

8. One specific and systematic policy, which has been applied for generations, goes a long way towards explaining the cause of many of the constraints faced by the rural Romani.

9. When Romani children enter school for the first time, they are separated, on the basis of their being Romani, from the non-Romani children and told to attend a separate school. Sometimes these schools are called "schools for the mentally sub-normal". The basis of selection is not educational potential but is normally based upon the cynical views of local authority officials. In smaller towns and villages, even the local mayor becomes involved in the selection process.

10. This policy is not a recent phenomenon. We have been informed by Romani that this policy was applied throughout the communist period (some 45 years). Unfortunately, when communism fell in 1989, pre-accession governments did nothing to discontinue this destructive and systematic policy to this day.

11. As a result, all of the current generations of rural Romani are without adequate formal education and many have difficulty reading and writing.

12. Officials in pre-accession countries will frequently explain the reasons for high levels of unemployment of the Romani is their "lack of education", "illiteracy" and lack of "training". The oft repeated lament by these same officials is that central Europe has a Romani "problem".

13. Commissioner Verheugen, the "problem" is not the Romani. The problem is those people, local authority and government officials who have knowingly supported and managed systematic policies of discrimination leveled against this minority for in excess of 50 years. The "problem" is official and institutional racial discrimination.

14. This policy is in operation now.

Economic and financial implications

15. Before exploring the unacceptable extent of this institutional racism in pre-accession central and eastern Europe, I need to draw your attention to why this is not just an issue of unacceptable behaviour and denial of basic human rights.

16. Pre-accession countries hope to join the European Union and, as members, some will wish, eventually, to join the European Monetary Union (EMU).

17. As you are aware, the economic structures and financial profiles of all pre-accession countries represent a potentially serious financial problem for the enlarged Union. This is because they will only contribute an additional 4% to the EU GNP while, at the same time, adding a staggering 40% increase in EU agricultural output.

18. This has created a specific challenge for the development of appropriate policies for agriculture and rural development, which need to be affordable in national, or EU budget terms; the current problem is therefore low pre-accession country gross national products.

19. A fundamental reason for the lower per capita incomes of pre-accession countries is the fact that they have maintained systematic and discriminatory human resources policies which have eroded the earning capacity (personal productivity) of around 10% of their population. As a result, the maximum GNP attainable by these countries falls short of the potential by at least 10%. It is evident that this potential would rise as the percentage of the rural population with adequate schooling and training rises since personal earning capacities would rise.

20. However, in the case of Hungary alone, it is estimated that the opportunity cost to the national economy, of the sustained discriminatory education policy affecting the Romani, is some Euro 4 billion each year. Unfortunately, official figures under-state the true size of the Romani population, the true levels of unemployment and general under-employment. Because of other structural and administrative inefficiencies, the opportunity cost figure for Hungary is probably higher. This is the price paid by the Hungarian nation for their systematic policies of deficient educational provisions for the Romani.

21. You are aware that the current decline in the value of the Euro is linked to the increasing doubts the world money markets have concerning the macro-economic policies of the EMU members.

22. We are in a critical period when the Euro and the EMU are attempting to break important new ground on the international money markets. It is of fundamental importance that members of the EMU maintain a consistency of overall macro-economic management; this remains a critical and sensitive issue for the eventual success of the EMU.

23. Any prospective members of the EMU, which maintain such an intentional erosion of their national human resources capability, could never receive serious consideration as members of the EMU. Indeed, the acceptance of countries, which demonstrate an ability to maintain such financially destructive human resources policies, would severely undermine the credibility of the EMU; few would take the EMU seriously.

Is the EU electorate informed?

24. It is extraordinary that the European Commission, and those concerned with macro-economic planning and finance have not drawn more open attention to this matter.

25. Within the agricultural and rural development sphere it is evident that this, in part, is due to the failure of programme design and financial provisions, for pre-accession, being subjected to a transparent participatory process; the electorates of the EU remain largely ignorant of what is being carried out in their name in pre-accession countries. As a result, an urgent question arises:

26. Besides keeping the broader EU public in the dark as to realities, the European Commission has also been correspondingly unconcerned about the fact that the the majority of the pre-accession country electorates have been kept in the dark too. It has been widely reported to us that the preparation of programmes and provisions for pre-accession have not even involved the sounding of opinion of the electorates, let alone sectoral stakeholders, of pre-accession countries. Proposals in agriculture and rural development therefore lack transparency and democratic legitimacy.

Expansion to where?

27. As I am sure you will agree, racism is unacceptable. In its more nationalistic and xenophobic form it has given rise to the major European divisions and social disasters. In the last war, some insane individuals conceived of something called the "final solution" of eliminating people who were different. These individuals, who considered themselves to be "racially superior" were aware that systematic policies leveled against minorities, and in particular the Romani, were the cause for such communities being conceived as being "different" and therefore a "problem". As a result, the Romani were the first to be systematically exterminated in the holocaust.

28. Racism is one of the most primitive forms of collectivism. Europe has seen too much of this low culture of seeking of comfort in sameness with tendencies to suppress individual human expression, crushing individualism, independent thought and yes, dissent.

29. Democracy, currently in a fledgling form in pre-accession countries, will be provided with a significant disservice if the European Commission turns a blind eye to the sort of toadying, intellectual corruption, and underlying institutional violence which commonly supports institutional racial discrimination.

30. As citizens of the European Union we welcome the fact that, until now, the period of its development and expansion has been associated with an unprecedented peace and relative prosperity. However, we cannot afford to forget that this peace has been gained through painstaking efforts to reduce institutional discrimination. On balance, throughout most of the European Union there has been a gradual decline in racism. It still exists but it does not find a generalized or systematic expression in the operations of public authorities. Most members of the public in the EU tend to take for granted the increased security and tranquility of daily life resulting from reduced ethnic tensions.

31. It is not without reason that those individuals and non-governmental organizations, within the European Union, who are concerned with reducing racism and discrimination, of all kinds, have significant reservations, and even fear, concerning the possibility that countries who maintain open institutional discrimination are in line for accession.

32. Therefore the European Commission can not presume that citizens in the European Union will, or should, tolerate any accessions negotiated on the basis of "transition periods on the issues of institutional discrimination and racism."

33. It is vital that European institutions, and especially those concerned with EU enlargement, do not appear to be condoning racism by ignoring it.

34. Racism is something, which needs to be condemned, and it also needs to be tackled openly without any undue over-sensitivity for the feelings of those guilty of its practice.

35. Let us speak plainly, the objective of tackling racism openly is to stop the practice of racism.

36. Given the current standards of operation of public institutions in member states of the European Union it is essential that the cessation of institutional racism in pre-accession countries should be a non-negotiable component of the entry price for gaining accession to the European Union.

37. Currently, the educational discrimination leveled against Romani children and which has affected the whole rural Romani population, is under the management of rural local authorities. Such discrimination would be unacceptable in the member states of the European Union and therefore members of the public within the European Union have a justified right in asking the question:

38. It is therefore also unacceptable for the European Commission to presume that providing pre-accession funding to such local authorities, for any activity, other than removing this practice, would be acceptable to the citizens of the European Union.

EU Commission responsibilities

39. A large part of the problem and the cause for us having to send this communication to you, is that the steps taken by the last Commission, and in particular DG 1A and DG VI in defining a pre-accession strategy for agriculture, were not transparent. DG VI is promoting a broad initiative in rural development to eventually draw funds, on accession, from the structural funds.

40. It is apparent that the preparatory analysis undertaken by the Commission was deficient. This is evident from the massive under-estimate of the macro-economic significance of this rural human resources issue. As a result the European Commission has failed to alert pre-accession governments to the full implications in economic terms and in terms of the non-acceptability of the practice of educational apartheid.

41. If the European Commission is serious about its declared intent to support "rural development" in pre-accession countries, then the priority action has to be a major effort in human resources development. This will require specific financial provisions for tackling the establishment of equal opportunities for the rural population to participate in an effective economic development process. This also means stopping the current apartheid education system, forthwith, and substituting this with a more logical and humane system, which nurtures the innate intelligence and creativity of prospective citizens of the European Union.

42. It is very doubtful that the electorate of the EU would be comfortable in the knowledge that EU Commission funds made available through Phare, ISPA and SAPARD were destined to assist any rural local authorities who are currently responsible for the systematic racial discrimination outlined above. This, I am sure you will understand, is a de facto reason for doubting the current legitimacy of providing EU funding to such rural local authorities.

43. As in the case of land markets and long term finance, covered in a separate communication, the European Commission has once again overlooked another major difference between pre-accession agriculture and rural development needs and those in the EU. In doing so the Commission has overlooked the main cause of under-development and the main potential for economic growth in rural areas.

Your service progress reports

44. The level of analysis and substantive content of the European Commission progress reports on pre-accession government "performance" leave much to be desired.

45. In the current context, your service's progress reports tread too lightly on the issues of the treatment of the Romani.

46. Indeed, in spite of the diplomatic nudges for more efforts on the part of pre-accession governments, the analysis and comments come nowhere near providing comment to match the gravity and the true extent of this macro-economic, social development and human rights problem. As such, it is not an exaggeration to state that these reports represent a disservice to the EU tax payers and indeed, to the Romani.

47. As in the case of the land issue, your enlargement team does not appear to have access to independent sources of information. Your team appears to be relying too much on information supplied by the very governments who have a specific interest in smoothing over this particular question.

48. In this context I will mention just some topics where the European Commission progress reports do not present the true facts, and therefore are unacceptable.

(i) The issue of separate schooling seems to feature only in the Czech republic progress report when such discrimination is widespread in Hungary and Slovakia (we are currently communicating with sister organizations in the countries concerned to improve our information on the extent of this practice in other countries).

(ii) The positive view of the progress report on the Hungarian "Romani self government" structure is naïve and without practical foundation. This system certainly exists and enjoys some degree of press coverage. However the system exercises no effective power, it has no effective resources and lacks human expertise; it is no more than a show. Consequently, the Romani here in Hungary with whom we have discussed this matter, consider the system is impotent and unable to solve the real problems facing Romani. Others allege that the reasons the system continues in operation are simply that those running it gain an income and some status. Indeed, there is increasing evidence that many consider the system to be getting in the way of the required national democratic process of increased social and economic inclusion of the Romani. It is certainly not a model to be emulated by other central and eastern European countries.

(iii) The last progress report on Hungary states that specific funds being made available by the Hungarian government for employment initiatives and agricultural projects. It is true that government put on a television "show" concerning this move but nothing substantive has happened. Indeed the lack of follow up, by the government, has severely undermined the credibility of the Romani leadership involved.

49. We would like to alert you, and your enlargement team, to a political reality repeated to us on several occasions and confirmed by political analysts in several pre-accession countries. Few, if any, current pre-accession political parties, in government, or in opposition, are prepared to make public statements committing themselves to providing any substantive funding for initiatives to help the Romani. This is because they fear that they will lose their vote; this is the reality. This is a significant component of the "motivation" of the governments with whom the European Commission is currently negotiating this question.

50. It is therefore a waste of time and an insult to everyone's intelligence, and especially the intelligence and feelings of the Romani community, for the European Commission to await useful and productive proposals from the pre-accession governments on this issue.

51. The basic "strategy' is that by doing a constructive job on the neutral "acquis" issues, governments hope that this more fundamental issue will become an "end of game" issue which will be easily "fudged" as accession activities gain momentum and accession dates approach.

52. Commission Verheugen, this specific issue needs to be moved forward now, and in a constructive way. This has to be achieved in a way which defends the rightful interests of the existing minorities and the public in the European Union. Actions must defend the rightful interests of the Romani. Therefore the European Commission needs to propose standards, which need to be attained in the treatment of the Romani, and these should be a non-negotiable condition for attainment of EU accession.

53. We have stated above (para. 34) that pre-accession governments will not fund this required change to any significant extent.

54. We therefore recommend that the European Union (Commission) give serious consideration to providing the bulk of the funding for this essential aspect of pre-accession transition. This would mean re-prioritizing the whole of the current pre-accession financial provisions for rural development.

55. It is more than likely that the public in the European Union would support this act of historic and humane significance, if it is planned and implemented in a transparent fashion.

56. Such an act would be the single most significant historic step taken by any European authority, during the last 700 years of Romani existence in Europe, and would initiate the process of social and economic inclusion of the Romani on a constructive and sustainable basis.

57.There is little doubt that such a redistribution of pre-accession funds towards human resources development (education and vocational training) can be effectively complemented by levering private investment into agriculture and rural initiatives. We have already outlined to you in another communication how this can be promoted through free land markets and long term finance.

58. It is possible to raise the total economic impact of EU funding to significant and sustainable levels.

Some practical considerations for implementation

59. Because this proposal addresses a population lacking basic education and largely living under precarious circumstances, there is a need to undertake this work with a strong emphasis upon participatory development. By involving the potential beneficiaries in project and policy identification and design a sense of "ownership" is developed and implementation is likely to be more successful.

60. It is the general failure to use participatory development by the European Commission which has led to the oversights raised by us in this and the previous communication concerning land and long term finance.

61. In order to maximise the funding and simplify the management of this important job, it would be advisable to establish a "Romani Development Trust Fund" to which the European Union should contribute and other international and bilateral agencies should be invited to become donors. Donors, would sit on the board of management of the Trust Fund.

62. Technical and implementation management should not rest with the European Commission but with staff employed by the Trust Fund.

63. Community based initiatives should be developed through Romani forums following transparent guidelines defined and issued by the Trust Fund.

64. In order to facilitate the local communications and oversight of development projects the Trust Fund should support a Romani training and extension service. This would provide vocational training, technical assistance as well as monitor and report on the progress in the termination of the arpartheid education system and the implementation of necessary integration of Romani children within the formal school system.

65. Our own soundings with Romani groups indicate that the emphasis of funding should be for employment creating projects, of any type, to be run on an individual, corporate or community basis.

66. The effectiveness of use of Phare funds during the last 10 years is highly variable. The management of such funds by government agencies has in many cases been incompetent. For this reason governments should not handle such funds. Such funds should be banked with the Trust Fund and transferred to implementing agencies which should be non governmental and non profit foundations, where possible involving structures which permit the Romani to run the projects themselves.

67. Even under such circumstances, our experience in central and east Europe tells us that there are many possibilities for inefficiencies, corruption and diversion of EU public funds. For example many NGOs and foundations are in fact owned, were founded or maintain intimate links with pre-accession government politicians and or ministries. This signifies a potential loss in the effectiveness, in the use of EU funds and this needs to be avoided.

68. It is therefore recommended that the European Court of Auditors be asked to provide an independent field team to make up a component of the Romani training and extension service to monitor the use of Trust Funds.

69. This team should report on a quarterly basis, rather than on the current Phare basis of ex post reporting. In this way any problems can be checked and corrected in "real time".

Distribution

70. Because some of the content of this letter refers to issues concerning actual or potential misallocation and/or misuse of EU public funds, this letter has been copied to your fellow Commissioner, Mr. Neil Kinnock, who has an interest in such matters.

71. Because some of the content of this letter refers to issues concerning human rights and institutional discrimination, this letter has been copied to your fellow Commissioner, Mr. Chris Patten, who has an interest in such matters.

72. Because of poor preparatory planning by the European Commission, there is currently a low potential economic development leverage from EU previsions for pre-accession. There has been a failure to insist on adoption of an essential human resources development as a priority in rural regions. We are therefore exploring the implications of this predictable low performance from the application of EU public funds with the European Court of Auditors.

Yours faithfully,

Hector W. McNeill

Director

Cc:

Neil Kinnock

Chris Patten

Court of Auditors

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